The Pension Nightmare

Published on
July 9th, 2019
41 minutes

The Pension Nightmare

The Interview ·
Featuring Paul RT Johnson Jr.

Published on: July 9th, 2019 • Duration: 41 minutes

Paul RT Johnson Jr., CIO of Chicago Educational Research Foundation and former trustee at Illinois State University Retirement System, reveals the massive inefficiencies in the management of pension funds and how the use of derivatives could help. Paul talks candidly about the giant fiscal issues that Illinois and other public pensions face as their unfunded liabilities create a demographic problem of mass proportion. Filmed on May 22, 2019 in Las Vegas.



  • NG
    Naveen G.
    19 July 2019 @ 18:00
    I worked for Paul in my first job out of school. Everything he mentioned is basic strategies that are zero risk (example: if a pension has to re balance, then why not do so via covered calls so you earn the premium?).He is someone who cares deeply about his home state of Illinois and is on the board essentially volunteering his time and expertise. The issue is that most pension trustees do not have the expertise and its an uphill battle for people like Paul to convince the others to pay attention
  • PN
    Philip N.
    10 July 2019 @ 02:09
    The more I learn about these big pension schemes the more I think it is time to end them. Let people save for their own retirement. Let people plan for themselves. To make this easier stop destroying the purchasing power of money. An easy way to stop the debasement of money is to freeze the salaries and pensions of politicians and central bank employees.
    • WM
      Will M.
      14 July 2019 @ 16:50
      Phillip you still need to help 95% of folks with a 401K in terms of investment since that has effectively replaced the pension for most people. The problem is people who spend other peoples money and take risks with it, and the States who promised big pensions then don't fund them, thats criminal. The fact that pensions and medical were ramped up by politicians who simply made promises to get elected is just morally bankrupt. When the revolution comes they are the first people that need to be taken to the wall.....
  • dm
    david m.
    10 July 2019 @ 15:09
    Curious that this well-dressed gentleman considers himself a contrarian investor, while selling vol. For pensions. It would be interesting to see how things work out for him and the pension he's advising.
  • JC
    JP C.
    10 July 2019 @ 01:44
    Well done Tyler! This was great. Although not sure why RV recently created their own "spoof content" when you could have simply used this.
  • CM
    Cat M.
    9 July 2019 @ 21:34
    I thought it was a good interview. What has always mystified me is why pension plans and other institutional investors don't use at least basic derivative strategies to increase their returns. It's really a matter of managing risk - and that's something that is easily done with derivatives. With pension plans deep in the hole, it seems to me that it's about time the managers came out of their ivory tower and took the time and effort to learn how to use derivatives effectively to manage the money under their care.
    • MK
      Michael K.
      10 July 2019 @ 00:37
      How would you use derivatives to increase returns?
  • DR
    David R.
    9 July 2019 @ 23:28
    Valuable in a contrarian manner, hearing what Johnson valued as worth discussing gave a taste as to the pension managerial ethos. Not a traditional interview for sure, still great work by interviewer!
  • JL
    Jinny L.
    9 July 2019 @ 23:13
    Tyler looks a bit like Ryan Gosling
  • JS
    John S.
    9 July 2019 @ 15:24
    Super valuable to see how this guy thinks and narrates the pension situation. On the one hand he understands very clearly the nature and gravity of the problem, and on the other he simply rationalizes ALL of it. He may be the best analog for the Ponzi that I have seen yet
    • TN
      Tyler N. | Real Vision
      9 July 2019 @ 20:26
      Agreed John....
  • Hv
    Hannah v.
    9 July 2019 @ 19:40
    Meh.. it’s seems he is selling his points to an enraptured Sally and Joe Public: “Use the money you have to enhance [returns] by leveraging.” “Selling puts.” “There are ways to cover your tail risk position.” “Continue to fund properly.” “Manage the money wisely.” Okaaaaaaayyyy. Rubio, Buffett blah blah blah. What I still don’t get is derivatives. Sigh. Either I’m getting smarter and I’m outgrowing Real Vision’s platform, or the content is getting shallower. Please showcase deeper thinkers or perhaps have the guests outline what they plan on discussing for a whole hour. And get them to sign an ironclad “no name-dropping” clause.
    • TN
      Tyler N. | Real Vision
      9 July 2019 @ 20:25
      Hey Hannah- I think this piece was to candidly portray what decisions are being made in markets from an unfunded pensioners standpoint which is essentially a political decision to invest in horrible ways. (therein lies the biggest problem in the market). It wasn't a recommendation for your average investor, but rather a sobering look at how messed up things really are....
  • FA
    Frank A.
    9 July 2019 @ 19:45
    A fund that is about 42% funded....he was a trustee,.....he sells derivatives for a living......He nor anyone in Illinois is someone I would be listening to about the state of the DB pension system.
    • TN
      Tyler N. | Real Vision
      9 July 2019 @ 20:22
      I think you nailed this piece Frank. It was supposed to be a glimpse behind the eyes into how the pension funds operate, which clearly is a disaster and probably the biggest problem in our economy....It's an unsustainable train wreck but a powerful driver for markets because unfunded pension $ dwarf most inflows or outflows in equity funds....
  • CB
    C B.
    9 July 2019 @ 18:31
    "It may be time to start over" - Paul Johnson Let the great start over begin!
  • DS
    David S.
    9 July 2019 @ 17:26
    The pension nightmare exits, but a mass move into the derivative space may cause more problems. It would be interesting to have Ed Harrison interview someone one the counterparty risk with a major downturn. DLS
  • KW
    Ken W.
    9 July 2019 @ 16:52
    I feel bad for Ed Harrison. Tyler does a fairly interesting interview here, but Ed is shows up during the last minute of the video to peddle for RV. Not going to speak for Ed because I don't know how he feels about the situation, but I'd be upset. He's conducted insightful interviews himself and I think this is an insulting usage of his talents.
  • PU
    Peter U.
    9 July 2019 @ 13:03
    don't waste your time
  • PU
    Peter U.
    9 July 2019 @ 12:57
    Sounds like I am getting pitched on a new BMW . . . .
  • ns
    niall s.
    9 July 2019 @ 11:24
    I would have been interested to hear more about his strategies for boosting returns using derivatives
  • ml
    m l.
    9 July 2019 @ 10:39
    Thank you this is the content your customers want !